China's SMIC-Qualcomm 28-nm Deal: Why Now?

MADISON, Wis. — China's largest foundry, Semiconductor Manufacturing International Corp. (SMIC), and Qualcomm, the world's most dominant baseband cellular processor company, revealed Thursday, July 3 that they are collaborating on 28-nm wafer production in China.

Under the agreement, Qualcomm will offer support to accelerate SMIC's 28-nm process maturity, while SMIC will make Qualcomm's latest Snapdragon processors on 28-nm node, both PolySiON (PS) and high-K dielectrics metal gate.

With its future growth dependent on the advancement of its 28-nm technologies, the deal marks a big win for SMIC.

Less clear is what advantages this will give to Qualcomm, other than mending the company's relationship with the Chinese government.

SMIC isn't exactly known for cutting-edge process technologies, compared to other foundry giants.

Indeed, in an exclusive interview with EE Times last March, Tzu-Yin Chiu, SMIC's CEO acknowledged a broadening technology gap with Taiwan Semiconductor Manufacturing Co. (TSMC). At a time when leading fab owners are busy talking about a 14-nm process node, SMIC's CEO then said that its 28-nm process node is "now frozen," allowing potential customers to test and verify SMIC's newest node.

Where SMIC's 28-nm process technologies stand. (Source: SMIC)

Antitrust investigation in China Since China launched an antitrust probe into Qualcomm late last year, speculation abounds that Chinese authorities are probing ways to coerce Qualcomm into collaborating with their electronics industry.

Qualcomm reportedly faces penalties that may exceed $1 billion. The National Development and Reform Commission (NDRC), China's main planning body, raided Qualcomm's Beijing and Shanghai offices last year.

The NDRC has used the anti-monopoly law to target technology companies for practices that could lead to what it calls "unreasonably" high prices. In February, the Chinese regulator said it suspects Qualcomm of overcharging and abusing its market position.

When asked where the NDRC's antitrust investigation stands today, Christine Trimble, Qualcomm's vice president of public affairs, told EE Times, "We continue to fully cooperate with the NDRC and have no further comment."

Qualcomm is also saying very little about the deal with SMIC. Asked about which Snapdragon processors SMIC will make and when Qualcomm expects production to start, the company spokesman said,
"We're not disclosing any details."

When questioned why Qualcomm decided to pick SMIC as its foundry partner in China, the spokesman spoke in boilerplate: "Qualcomm has been collaborating with SMIC several years and this announcement represents an extension of this relationship to the 28-nm technology node."

In contrast, SMIC is much more willing to disclose the company's future plan with Qualcomm.

My friend Zvi Or-Bach makes persistent comments about cost no longer declining in advanced nodes. This may or may not be correct, however. Many experts disagree and consider it a "mythology" based on a long discredited graph that is reproduced over and over.

More importantly, the argument may be irrelevant. It is indeed correct that gate density remains same in 20nm planar and 14/16nm FinFET nodal processes. However, power and leakage will profoundly decrease in FinFET process. And power and leakage reduction may be far more imortant than density increase -- for both smartphones and mega data centers.

3D ICs are certainly intriguing and are clearly approaching in few years in memories (HMC, etc.). In mobile processors bandwidth requirements are certainly increasing and drive new type of packaging solutions. Still - even here there are alternative approaches. Leading smartphone OEMs use non-standard memories with ball pitch with 0.4mm and even 0.35 mm pitch. This allows use of traditional package-on-package approaches.

I would say Monolithic 3D will indeed become pivotal - for Global Foundries. They've got specialists from CEA-LETI over in the Albany area. Qualcomm already expressed their interest in this development and also joined the LETI M3D R&D program. I'm sure SMIC will catch up eventually, but they still have a long march to go.

Really great point you make here, @Or_Bach. Thank you. Yes, I did notice in the release, SMIC is talking about 3D IC, which I found interesting. But now that you add more context to it, yes, this could be interpreted as the beginning a big change for the semiconductor industry. Makes sense!

The following comment is speculative and (hopefully?) provocative.

This SMIC -Qualcomm announcement could be the beginning of pivotal change for the semiconductor industry. In my recent article, "28nm – The Last Node of Moore's Law" we have pointed out that dimensional scaling beyond 28nm would not provide reduction of SoC cost and, accordingly, 28 nm could the preferred node for many years. And recently we reported that the industry logic-SOC leader -- Qualcomm "Calls for Monolithic 3D IC ... to make up for the loss of traditional 2D process scaling as wafer costs for advanced nodes continue to increase". Now we have SMIC announcing that it will bring to the market a monolithic 3D for Qualcomm ("Going forward, SMIC will also extend its technology offerings on 3DIC and RF front-end wafer manufacturing in support of Qualcomm Technologies.") So yes, at this time "only a small portion of semiconductors consumed in China are actually produced in China" and yes, "SMIC isn't exactly known for cutting-edge process technologies, compared to other foundry giants." But as the value of the more advanced nodes is diminishing, this announcement suggest that SMIC is positioning itself to lead in the next generation technology driver - monolithic 3D, using the most effective node for years to come. If the rest of the foundries will ignore it, they may find themselves trailing behind SMIC in few years, in what by then could become THE technology driver.